‘Required’ station fees for web services are just a ‘proposal,’ says NPR Board chair

Published on Current.org May 23, 2011

Plans to restructure NPR’s digital services to pubradio stations, in the works for months, have finally gotten down to specifics: what NPR will offer, what it will cost and who will pay. Based on prices that NPR has proposed — between $1,800 and $100,000 a year — some stations are now experiencing a new virtual variety of sticker shock.

In round robin meetings that began in April, NPR execs have been briefing station leaders on their planned offering, a comprehensive package of technology support, training and content, but some station leaders reacted angrily after a May 12 NPR memo said all member stations would be required to pay fees for the services.

Joyce McDonald, v.p. for member and program services, notified top stations execs — the so-called “authorized representatives” who speak and vote on behalf of their stations — of NPR’s plan to begin phasing-in new required digital services fees. The memo coincided with the NPR Board’s May 12-13 meetings in Washington, D.C.

Many misunderstood the message as a statement of board policy and a done deal, when McDonald intended to give station execs advance notice of proposed dues increases for next fiscal year, according to NPR.

Reactions posted on the A-Reps message board prompted NPR’s top leaders to backpedal, reassuring stations that no decisions had been made.

“A message went out to all the A-Reps, and it was not worded correctly,” Dave Edwards, NPR chair and g.m. of Milwaukee Public Radio, told Current. “It announced a fee structure based on a scenario, but the board hasn’t adopted anything. We’re waiting for station consultations on the plan to finish.”

The board weighed in on an earlier version of the plan in February and authorized the NPR staff to accelerate its rollout to stations in preparation for full launch later this year. The board also committed a “substantial, seven-figure investment” from its reserves to implement the service strategy over three years, according to Kinsey Wilson, senior v.p. of digital services and architect of the plan. He declined to specify the exact amount of NPR’s investment.

The annual fees include a flat charge on every member station of $1,800; some 70 stations that earn total station revenues (TSR) below $1 million a year would pay only that amount. Those with TSRs above $1 million would pay the base fee plus a percentage of their revenue, up to a total of $100,000, Wilson said.

The prices would be phased in over three years, starting at one-third of the eventual annual cost.

This fee structure is not “locked in stone,” Wilson said, but he didn’t see any viable alternatives to support the local-national networked news service except to scale back both the services and the prices.

“The main other option is to go it alone,” Wilson said. “There are other ways to adjust and tinker and put a different mix of services together, but the questions are: Do we do something in a comprehensive and unified way? Is public radio as a system better off if it acts with collective intentions in the digital space?” As NPR developed the plan and consulted with stations about it, the answers to both questions have overwhelmingly been “yes,” he said.

“This is high-risk politically within our system,” said Stewart Vanderwilt, g.m. of KUT in Austin. “Any time it’s proposed that everybody pay for something, knowing that not everybody is going to either believe in it or use it — that’s high risk.”

Pubradio marketing consultant John Sutton blasted the fee structure in a series of blog posts that began last week. Sutton criticized NPR for “promising the moon to stations” and then presenting a business model “that is nothing more than a tax on all stations for NPR digital services.” He characterized the proposal as a shell game, in which NPR proposes to charge hefty fees for digital services but make no guarantees about the return on their investment.

“NPR wants stations to believe, without showing revenue potential, that they can profit through NPR’s digital services even though NPR itself cannot,” Sutton wrote.

Sutton, whose clients include Listener Interactive, a technology company providing web and mobile services to public radio stations, pointed to the gap between NPR Digital’s $16.5 million budget for this year and its projected $9.1 million in digital sponsorship revenues. He asserted that NPR is shifting the cost to stations.

“It’s a business model for NPR to raise cash,” Sutton told Current.

This is the second-stage of a long-awaited overhaul of the technology services offered to public broadcasting stations through the technology services group formerly known as Public Interactive, which NPR bought in 2008.

Two months ago, during the Integrated Media Association conference in Austin, Texas, NPR unveiled its plan to offer a comprehensive package of technology tools and services to help stations routinely distribute and publish news reports and other content for their websites, mobile devices and other platforms. The service would let stations share in the back-end efficiencies and revenue opportunities of a networked digital news service. They would receive tools to customize their sites, training in best practices, access to web analytics and technical upgrades to help them build web traffic.

But in practical terms, the offering won’t fly unless a majority of station leaders believe the price is affordable and decide to rely upon the executives behind NPR.org, whose growth some regard with a mixture of wonder, envy and distrust.

“There’s never a good time to start a project like this, but in some respects we should have started it five years ago,” said Edwards.

NPR digital execs are laying out the potential for cost savings and revenue opportunities in their closed-door talks with station execs, and say they’re getting positive reactions to their presentations.

Compared to the cost for a station to “go it alone,” independently developing robust digital capabilities, the NPR proposal is very attractive, said Bob Kempf, v.p. and g.m. of NPR Digital Services. “That makes the reaction to the entire package favorable, because it’s very costly to manage the back-end and infrastructure of this if you’re not doing it at scale.”

There’s also a money-making proposal on the table, according to Wilson, although he declined to discuss it. “There’s an immediate opportunity that we see in the next year or two to raise money around these services that would more than pay for the total cost. We are providing details of that to stations.”

“This is like every other media enterprise in the world — there are lots of uncertainties around this and risks that everybody is taking,” Wilson said. NPR is presenting “tangible evidence” of how the services will help stations succeed in digital publishing.

“NPR’s investment in the service and revenues from digital underwriting help to offset startup costs” for an experiment in digital distribution, Wilson said. The network will absorb some of the financial risk, and stations can also contribute “while they’re still strong in radio.”

EARLIER STORIES

At the IMA Conference, NPR was to announce the creation of two similarly named units with different roles: NPR Digital Media, which provides content services, and NPR Digital Services in Boston, a descendant of Public Interactive, which provides web publishing tools and training, and NPR Digital Media in D.C., which provides NPR-branded content services.

Correction: An earlier version of this article stated that McDonald’s May 12 e-mail described the fee structure as a done deal. She didn’t use those words or describe the new fees as board policy, but that’s the meaning that many A-Reps derived from from her wording, according to station execs with access to the message board postings.Comments, questions, tips? karen@current.org